Think about the way your dealership approaches new vehicle sales. The salesperson does their bit – a needs-based assessment, a walk-around, a test drive, and negotiates a deal with the customer. The essentials of making a sale. It seems like a standard strategy in every dealership. At least, on the surface it does. But it has very little to do with the sale itself.McKinsey & Company research gives a much more detailed glimpse into the inner sanctum of new vehicle sales strategies. You won’t be surprised to learn that a new car manager’s approach to new car sales impacts the whole dealership. It’s about a mindset or philosophy that permeates deep into the store’s bones.

It all begins with the new car sales strategy.

Three Types of New Car Strategies

These strategies begin with attracting customers to your store from their online research and end with a signature on the dotted line.
To get that done, there are three very distinct approaches dealers take—and, as a result, three different kinds of dealers.

“Unaware”

Some dealership work simply off of gut feeling. They don’t follow consumer trends or measure marketing or advertising tactics. They move cars the way they know how – the way they always have. Trouble is, this worked in the past more than it likely will in the future.
This still sells cars – but as we move into an ever-changing, increasingly digital world, traditional sales tactics need to change. If you’re not aware of the tools available to you, or you’re still having trouble wrapping your head around the digital landscape, you could be at risk. Customers now search online first – and you need to be meeting them there.

“Business As Usual”

Dealers in this stage are focused on maintaining the income that is already being earned, and that everything is functioning smoothly. New car sales are consistent. The goal is to make as much gross profit on every deal as possible.
But dealers here aren’t typically looking to grow. Growth could even add pressure they may not want, like increasing targets. More pressure comes from the OEM who expects more. The bar is raised, and those incentive levels change.
But an over-reliance on staying in the “sweet spot,” could also be risky. New car sales appear to be slowing in Canada, which means “business as usual” dealers may have no choice but to become more aggressive.

“Growth-Minded”

Top performers have their minds on growth. They are constantly working for ways to move their dealership to the #1 spot and do whatever it takes.

These dealers focus on a competitive consumer experiences or pricing strategies, as well as data and tools to turn a sale as fast as possible. For them, it’s about high-volume sales and fast inventory turn.
Growth-minded dealers have a secret. They know they can get that new car sale by providing a better experience – even if that means sometimes lowering their price. Because they realize that doing so will earn them loyal, long-term clients – and that they’ll make their money back on after-sales service from customers for life.

For the growth-minded dealer, every sales target is meant to be broken. They also know that to do that month after month requires forethought and strategy.

The Whole-Store Effect

A new car sold and rolled doesn’t stop earning money for the dealership. It continues to earn for years (if you’re doing things right), through regular service department visits, referrals, and repeat sales.
McKinsey’s research says that “the more profitable dealerships focus on practices in the service department that promote customer visits”.

So how do you get customers to the service department? You sell them a new car.

The Takeaway

Only a small portion of dealerships strive for the number one new car sales spot while the rest are content to stay where they’re at. The benefits of growing new car sales are great for the sales department, but also means perks for everyone.

An autoTRADER.ca Story

New car buyers now spend nearly seven hours online browsing listings and comparing models— and they want to know what your store has before they visit.

Imagine a consumer scrolling through the marketplace and landing upon the new car they’ve been looking for. They travel five hours past countless dealerships to get to that one dealership to purchase the car. Why? Because that dealership had their car listed on autoTRADER.ca, it was well merchandised with photos and all the details the consumer needed so they didn’t even have to submit a lead, they could just show up ready to buy.

This came true for one autoTRADER.ca dealer partner in Alberta.
That means it’s essential to have your new vehicles listed online.